Intellectual property trading exchange and a method for trading intellectual property rights

ABSTRACT

An intellectual property trading exchange is disclosed for facilitating the trading of intellectual property rights. The exchange includes at least one intellectual property license contract relating to intellectual property rights and a forum configured to allow a plurality of participants to trade the license contract. The plurality of participants includes at least one seller, which may be the owner, having the license contract and desiring to trade the license contract. The plurality of participants also includes at least one buyer desiring to obtain the license contract. The buyer may be an investor, speculator, market maker, or arbitrageur, who purchases the license contract to achieve appreciation. The buyer also may be a licensee, who purchases the license contract to practice the intellectual property rights.

CROSS-REFERENCE TO RELATED APPLICATIONS

The present application claims the benefit of priority to U.S.Provisional Patent Application No. 60/672,324 filed Apr. 18, 2005, whichis hereby incorporated by reference in its entirety.

BACKGROUND OF THE INVENTION

The present invention relates to a trading exchange and, moreparticularly, to an exchange and method for trading intellectualproperty (“IP”) rights, including rights in patents, copyrights,trademarks, trade dress, and trade secrets.

The market for IP rights has never been stronger. In 2005, for example,royalties from the licensing of IP rights accounted for more than $100billion in revenues. Both sellers (or licensors) and buyers (orlicensees) of IP rights have had the potential to make substantial gainsin recent years because of an increased licensing demand.

Currently, there is no centralized marketplace for carrying out thelicensing of IP rights. Rather, an IP owner desiring licensing capitalmust solicit bids from potential licensees and negotiate a licensingagreement. The transaction is similar to the licensing or sale of anyother significant property or asset and may take weeks, months, or evenyears before any deal closes.

A drawback of the current IP licensing market is that IP owners mustactively pursue parties for licensing. This process may be both timeconsuming and expensive, because IP owners usually are not fully awareof the entire market outside of their competitors and often mustdedicate time and money to research the marketplace. Often, IP ownersengage in expensive licensing campaigns to determine which parties mightbenefit from an IP license and then solicit those parties for interest.It is not unusual for licensing campaigns to extend a period of yearsfor identifying and targeting all potential licensees.

Another drawback of the current IP licensing market is determining avalue for the IP. After a potential licensee is identified, the IP ownerand potential licensee must negotiate a royalty or fixed price for theIP rights. While valuation may be fairly settled in establishedindustries, arriving at a reasonable value for IP related to new oremerging technologies may not be easily accomplished. In any technology,the valuation process may require weeks or even months of negotiatingbefore any licensing agreement is signed. Some valuation methods haveexpedited this process, such as the methods disclosed by U.S. PatentApplication Publication No. 2003/0200104 to Heming et al. (“the HemingApplication”). Yet, the Heming Application does not address valuationfor new or emerging technologies or the problems described above withdetermining the licensing market.

In the current IP licensing market, litigation is the only means ofrecourse an IP owner may have against infringers or parties refusing toaccept or pay for licenses. Because of this, the current IP licensingmarket often is reactive by focusing primarily on parties that alreadyare infringing certain IP rights. For instance, an IP owner may discoverthat a competitor is making or using a certain patented device. Shouldlicensing negotiations not prove successful (or not even be an option),the IP owner may have to prevail in a patent infringement lawsuit beforethe IP owner is rightfully compensated for the infringer's use of thepatented device. Patent infringement lawsuits often are extremelyexpensive, sometimes costing multiple millions of dollars, andresolution is seldom quick. In other words, an IP owner may have tospend millions of dollars and wait several years before prevailing in apatent infringement action and finally realizing any financial gain fromthe IP.

A couple alternatives to the traditional IP licensing market exist, suchas patent pools and patent license exchange companies. Patent pools, forinstance, collect IP that typically is related to a standard and licenseit non-exclusively under common terms. Patent license exchangecompanies, on the other hand, raise money (sometimes as much as hundredsof millions of dollars) to purchase patents and license or enforce themagainst infringers. While patent pools and patent license exchangecompanies tend to expedite the traditional IP licensing process, theyoften do so at the expense of the value of the IP. For example, a patentpool may not receive the maximum value for each patent among the pool.In order to maintain marketability for the entire pool, certain patentswithin the pool may be considerably discounted or licensed for far lessthan the market may provide if the discounted patents were licensedindividually.

Convenient marketplaces exist for buying and selling (or trading) othertypes of property rights and assets, such as stocks and othersecurities, commodities, futures, and even environmental emissionspermits. For example, various exchanges, such as the New York StockExchange (“NYSE”), actively trade stocks and securities. Otherexchanges, such as the Chicago Board of Trade (“CBOT”) actively tradecommodities and futures. And while most trading activity today isperformed electronically, some exchanges such as the NationalAssociation of Securities Dealers Automated Quotations (“NASDAQ”) areentirely traded electronically without utilizing a centralized tradingfloor. These trading exchanges allow for assets such as stocks andsecurities to be quickly and easily traded, both upon the initial publicoffering (“IPO”) and during subsequent day-to-day transactions. As aresult, owners of such assets have an immediate market for trading anddo not have to spend months seeking out buyers and negotiating prices.

Presently, there is no convenient, centralized marketplace for tradingIP rights. Accordingly, there is a need for an IP licensing marketplaceand a method of trading IP rights in an expeditious manner thatmaximizes the value of the IP.

SUMMARY OF THE INVENTION

In accordance with one aspect of the present invention, an intellectualproperty trading exchange is disclosed for facilitating the trading ofintellectual property rights. The exchange includes at least oneintellectual property license contract relating to intellectual propertyrights and a forum configured to allow a plurality of participants totrade the license contract. The plurality of participants includes atleast one seller having the license contract and desiring to trade thelicense contract. The plurality of participants also includes at leastone buyer desiring to obtain the license contract.

In accordance with another aspect of the present invention, a method isdisclosed for trading at least one license contract relating tointellectual property rights by a seller of the license contract to atleast one buyer through an intellectual property exchange. The methodincludes the steps of: the seller listing the license contract on theintellectual property exchange, the buyer purchasing the licensecontract through the intellectual property exchange, and theintellectual property exchange clearing the purchase by the buyer of thelicense contract.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 shows the steps of an initial offering of licenses on anembodiment of an intellectual property trading exchange of the presentinvention; and

FIG. 2 shows typical day-to-day transactions on an embodiment of anintellectual property trading exchange of the present invention.

DETAILED DESCRIPTION OF THE INVENTION

The current market for intellectual property (“IP”) and sophisticationof current exchanges provide an opportunity to develop efficiencies inthe IP marketplace and maximize IP valuation through an IP tradingexchange. An IP trading exchange may be used for licensing or sellingall types of IP, including patents, copyrights, trademarks, trade dress,and trade secrets. Moreover, in one embodiment of the present invention,the IP may include issued patents, registered copyrights, registeredtrademarks, or any other granted or registered IP. In another embodimentof the present invention, the IP may include pending patentapplications, pending trademark applications, or any other pending IPapplication or registration.

An IP trading exchange offers a forum in which IP owners, licensees, orfinancial investors or speculators may buy or sell IP rights throughlicenses and/or related futures contracts. For example, in accordancewith one embodiment of the present invention, an IP trading exchange maybe used to buy or sell IP rights through licenses, which may then beused to practice the invention or legitimize current operations that maybe infringing. In accordance with another embodiment of the presentinvention, an IP trading exchange may be used to buy or sell speculativeIP rights through futures contracts, the goal of which is to earnappreciation by re-selling for a higher price at some time in thefuture.

Key Elements of an IP Trading Exchange

Following are descriptions of key elements of an IP trading exchange inaccordance with one or more embodiments of the present invention. An IPtrading exchange may have some or all of these elements, as well as anyadditional elements necessary for the setup, execution, and dailyoperation of an IP trading exchange.

Intellectual Property. Intellectual property (“IP”) includes patents,copyrights, trademarks, trade dress, trade secrets, and any otherintangible ideas or expressions. IP is a form of legal entitlement,which allows its owner or holder to control the use, manufacture, orsale of the IP. For example, a patent allows the owner or holder toexclude others from practicing an invention. Manufacturers and otherpotential holders gain the right to practice an excluded invention bylicensing or purchasing the rights from a patent owner. In an IP tradingexchange, certain IP is accepted for listing on the exchange, asdescribed below.

IP Owner. The IP owner (licensor) provides licensing and sub-licensingrights to licensees in exchange for royalties or other compensation asstipulated by the license agreement. In accordance with one embodimentof the present invention, an IP owner licenses the IP to an investmentbank in exchange for a cash payment. In accordance with anotherembodiment of the present invention, an IP owner performs the listingand underwriting of IP license contracts itself and without theassistance of an IP investment bank. The IP owner may include multipleindividuals and/or entities. For instance, the IP owner may include allof the owners of various intellectual property rights relating to aspecific product or industry.

IP Investment Bank. In accordance with one or more embodiments of thepresent invention, investment banks receive the IP rights from the IPowner and package them for listing or inclusion on the IP tradingexchange. Specifically, an investment bank rates, insures, and valuesthe IP, as described below. Additionally, the investment bank mayperform other functions such as underwriting the licensing transaction.Further, the investment bank may certify that IP license contractscomply with the regulations of trading and the requirements of listingon the IP trading exchange. The investment bank may then list the IP onthe IP trading exchange and sub-license the IP to perspective buyers. Inanother embodiment of the present invention, the IP investment bank mayhave the right to enforce the IP should an infringer not purchase alicense from the IP trading exchange. The IP owner may choose to jointhe IP investment bank in any enforcement proceedings if desired or ifnecessary.

IP Trading Exchange. The IP trading exchange monitors disclosures,guarantees transactions, and clears transactions similar to today'scommodities and futures exchanges, in addition to other functionsperformed by today's exchanges. The IP trading exchange may monitorand/or enforce regulations relating to trading, including regulationscreated by the exchange as well as governmental regulations. Further,the IP trading exchange may monitor and/or enforce requirements forlisting IP license contracts on the exchange. After the initialoffering, IP pricing is achieved by continuous or day-to-day trading, asdescribed below. The IP trading exchange keeps track of pricinginformation and provides pricing information on a realtime basis.Pricing information may be provided in any print (e.g., newspaper,facsimile) or electronic (e.g., ticker, RSS feed, webstream, e-mail,internet webpage) medium. Additionally, the IP trading exchange mayprovide pricing information in the form of industrial averages orindices, which may be based on average pricing information for licensecontracts relating to various technologies, industries, and/orcompanies.

IP Investors. IP investors (which may include speculators, marketmakers, and arbitrageurs) add liquidity to the market. IP investorspurchase IP licensing and/or futures contracts with the goal ofre-selling the contracts at higher prices sometime in the future. Insome embodiments of the present invention, the IP investors may act onbehalf of licensors or licensees.

Licensees. Licensees are the ultimate buyers of the IP rights andconsumers of the IP trading exchange. Licensees purchase IP licensing inorder to practice the invention. In some cases, licensees purchase IPlicensing in order to legitimize current operations that may beinfringing. In some embodiments of the present invention, the licenseealso may serve as the IP investor.

Initial Offering of IP Rights

For purposes of illustration only, an IP trading exchange may be thoughtof as a hybrid of today's stock and commodities exchanges. For example,the initial offering of rights to a particular IP may be modeled after astock initial public offering (“IPO”) on a traditional stock exchange.

In the first step of an IP initial offering, the IP owner identifies IPthat it desires to license. It then solicits bids from IP investmentbanks to perform the listing and underwriting process. Alternatively,the IP owner may perform the listing and underwriting process itself.

If the IP owner utilizes an IP investment bank, then IP investment banksbid on the listing and underwriting process, and the IP owner selectsone of the investment banks, typically the lowest bidder, to carry theprocess forward. Investment banks typically work out a fee structure forthe listing and underwriting process, which may be fixed fees, successor percentage fees based on the success of the IP initial offering, or acombination of both fixed and success fees.

Next, the selected IP investment bank may begin the due diligence phaseof the listing process. As described below, the due diligence phaseincludes: packaging the IP for listing; performing legal analysis of thestrength and ownership of the IP; performing market analysis of theproducts and/or parties which may infringe the IP and require or benefitfrom licensees to the IP; performing valuation analyses; and marketingthe IP. The due diligence phase may be conducted by the IP owner and/orthe IP investment bank. Alternatively, the due diligence phase may becontracted out to lawyers, economists, marketing firms, or otherspecialists and third parties.

By packaging the IP, the IP owner (or, for example, marketing firms)determine which of the relevant IP should be included in the listing.For instance, an IP owner may only have one patent, and only that patentwould be listed. But in instances where the IP owner has numerous IP ormultiple related IP, determining which IP should be included in a singlelisting may require careful consideration. For example, IP may begrouped by product or product group, such as all of the patents andtrademarks related to a particular car or line of cars. As anotherexample, IP may be grouped by patent families, such as a parent patentand all patents relating or based on the parent.

The legal analysis of the IP is to determine the strength, or at leastan opinion of the strength, of the IP. For instance, with patents, theprior art may be assessed and opinions may be made concerning anypossible invalidity issues based on the prior art. Additionally, claimcharts may be made and the claims may be construed to determine thepatent's scope of coverage. It also may be important to ensure thatcertain formalities have been followed, such as proper recordation ofany assignments, perfection of claims of priority, and/or payment of anyannuities or maintenance fees. With, for example, trade secrets, theextent to which the trade secrets have been kept confidential may beassessed, including whether non-disclosure agreements have been used andthe extent to which the trade secret has been disclosed, taught, ordemonstrated. As another example, with trademarks, a trademark searchand/or consumer surveys may be conducted to determine the brandrecognition or strength of the mark. Also, it may be important todetermine whether formalities have been followed, such as timely filingof statements of use and/or payment of any annuities or maintenancefees.

Valuation of the IP may involve the consideration of numerous factors,such as the strength of the IP, the ability to use or the availabilityof substitute or competing technologies, the market need for thetechnology, and/or the market size and number of parties that may bebenefit from or require licensing. Also, valuation may depend on thequantity of IP packaged together in the listing. Valuation may requirethe consideration of economists and lawyers. Additionally, third partyratings or assessments of IP may be helpful in determining the value ofthe IP.

Upon completion of the due diligence phase, the IP investment bankdetermines whether or not the IP should be listed on the IP tradingexchange based on the due diligence review. This determination is basedon the IP investment bank's own underwriting criteria. As with allrisks, some investment banks are more conservative than others and mayhave different standards in evaluating the above factors of the duediligence review. Should the IP investment bank accept the IP forlisting on the IP trading exchange, the IP investment bank assigns alisting price and provides an estimate of the cash from listing the IPto the IP owner.

If the listing price is satisfactory, the IP owner may grant the IPinvestment bank an exclusive license for the intellectual property withthe right to sub-license on a limited (e.g., quantity) non-exclusivebasis. In accordance with one embodiment of the present invention, theIP owner may retain a non-exclusive right to practice the IP at no costor at a reduced cost. In accordance with another embodiment of thepresent invention, the IP investment bank may obtain an exclusivelicense in order to have the ability to enforce the IP againstinfringers. The IP owner may choose to join any enforcement proceedingsif desired or if necessary.

Upon receiving the exclusive license, the IP investment bank may preparean IP prospectus and/or other marketing materials to attract potentiallicensees, investors, and/or speculators. These materials likely includeinformation obtained from the due diligence review. For instance, thematerials may include: a listing of the IP included in the non-exclusivelicense; legal analysis of the strength of the IP; the terms of thenon-exclusive license contract including the number of units that can beproduced and the duration of the contract; the nature of the enforcementactions that may be taken against infringers; portions of the valuationanalysis; when and under what terms additional licenses may be madeavailable (e.g., if license contracts trade for more than a certainvalue for more than a specific number of continuous trading days, a newrelease of licenses will be made available).

Next, the IP owner and/or IP investment bank prepares for the initialoffering of the IP rights. As with stock IPOs, the IP owner and/or IPinvestment bank seeks to list certain IP license contracts on the IPtrading exchange. The initial offering may be based on a certainquantity of IP license contracts, a certain duration for the IP licensecontracts, or a combination of both quantity and duration.

Then, the IP trading exchange allows the IP license contracts to belisted on the exchange. The IP license contracts may be listed bymembers or member firms of the exchange, which may include IP investmentbanks or other investors. Alternatively, the IP license contracts may belisted by the IP owner.

The IP trading exchange carries out duties which may be similar tocurrent stock exchanges. For example, the IP trading exchange monitorsdisclosures, guarantees transactions, and clears transactions. The IPtrading exchange may monitor and/or enforce any trading regulations,including regulations enacted by the exchange and/or any governmentalregulations. Alternatively, this function in whole or in part also maybe carried out by IP investment banks.

Additionally, the IP trading exchange may monitor and/or enforce anyrequirements of listing on the exchange. Alternatively, monitoringand/or enforcing of any listing requirements may be carried out, inwhole or in part, by IP investment banks. Listing requirements, whichmay be created by the exchange, may include considerations such aswhether the intellectual property rights have been litigated and, if so,the extent to which they have been litigated; whether competent priorart searches have been conducted; and/or whether any opinions of counselhave been made. Based on listing requirements such as the above, the IPlicense contracts may be listed separately on the exchange underdifferent types or classes. For example, IP license contracts relatingto intellectual property that has been litigated may be classifiedseparately from those contracts relating to intellectual property thathas not been litigated. IP contracts which relate to intellectualproperty that has been litigated may be further classified depending onthe extent of litigation. For example, IP contracts relating tointellectual property that has been litigated in district courts andfound valid and enforceable may be placed in one class, while IPcontracts relating to intellectual property that has been litigated inthe Federal Circuit or the Supreme Court may be placed in differentclasses. Additionally, IP license contracts relating to intellectualproperty where opinions of counsel have been made may be placed in aclass separate from those IP license contracts relating to intellectualproperty where opinions of counsel have not been made. One or more ofthe above requirements and/or considerations may be used in listing theIP license contracts on the exchange.

Investors, licensees, and licensors may purchase the IP licensecontracts from the IP trading exchange. Investors purchase IP licensecontracts with the goal of seeking appreciation or re-selling at ahigher price at some time in the future. In this sense, the IP licensecontracts are similar to a futures contract. Licensees, on the otherhand, purchase the contracts in order to practice the IP or legitimizeinfringing uses of the IP. In this sense, licensees take delivery of theactual license. Unused IP license contracts may be re-listed at a latertime on the IP trading exchange upon an audit of current operationsindicating that the IP is no longer being practiced or is within levelsconsidered acceptable by the license. Further, if future operationsrequire a license and the licensee has sold the license throughre-listing, then the licensee will need to acquire a new license fromthe IP trading exchange in order to resume operations.

In accordance with one embodiment of the present invention, the listingIP investment bank may initiate patent infringement actions and otherenforcement proceedings against infringers who refuse to purchaselicenses through the IP trading exchange. The IP owner may choose tojoin any enforcement proceedings if desired or if necessary. Excessproceeds from infringement actions may be used by the investment bank topurchase IP license contracts from the IP trading exchange, therebyincreasing the price of the contracts and raising the value of the IP.

Day-to-Day Transactions of IP Rights

For purposes of illustration only, an IP trading exchange may be thoughtof as a hybrid of today's stock and commodities exchanges. For example,day-to-day transactions of rights to a certain listed IP may be modeledafter a traditional commodities exchange where contracts are traded on adaily basis.

As part of the first step of a typical day-to-day transaction of IPrights, the owner or seller of at least one IP license contract liststhe contract and an asking or specified price on the IP tradingexchange. In situations where multiple contracts are owned, the IPlicense holder may list multiple if not all of the license contracts onthe exchange. The IP license holder may perform the listing itself or itmay retain an exchange member to perform the listing. The IP licenseholder may be an investor or speculator who is re-selling the licensecontract for a higher price. Alternatively, the IP license holder may bea licensee who no longer needs the license, as described below, or isselling excess license contracts.

Through the IP trading exchange, buyers determine whether or not demandis sufficient to buy the license contract for the IP license holder'sspecified price as listed on the exchange. If buyers are unwilling topay the specified price, then the seller retains the license contractuntil such time when the price becomes more attractive in the market.Alternatively, the seller may lower the asking price to attract a buyer,which may be necessary to sell the license contract if expiration isimminent.

If buyers are willing to pay the specified price, then the sale movesforward towards closing. Typically, an exchange member purchases thelicense contract on behalf of the buyer at the specified price, and theIP trading exchange clears the transaction. In most any situation, theIP trading exchange monitors any disclosures and guarantees and clearsthe transaction.

With investors, the buyer may hold the license contract until such timethat the price becomes attractive for the buyer to sell the contract. Ifexpiration is imminent, the buyer may be forced to sell the licensecontract, perhaps even at a discounted price.

In the situation of a licensee or licensor, the buyer may hold thecontract beyond expiry and take delivery of the actual license. Forinstance, a licensee may require the actual license in order to practicethe IP or legitimize current operations that may be infringing.Typically, the actual license is delivered by the specialist holding thelicense.

Where delivery of the actual license has occurred, the holder of thelicense may only re-list the license upon an audit of current operationsindicating that the IP is no longer being practiced or is within levelsconsidered acceptable by the license. Further, if future operationsrequire a license and the licensee has sold the license throughre-listing, then the licensee will need to acquire a new license fromthe IP trading exchange in order to resume operations.

While contracts are listed on the IP trading exchange, the IP investmentbank that initially listed the transaction or its agents may encouragepotential licensees to purchase licenses from the exchange. Conducting alicensing and/or marketing campaign often fosters interest in thelicenses, which may generate activity in the market and ultimately raisethe exchange prices and IP value.

Depending on trading activity, it may be necessary to release additionallicense contracts. For instance, if license contracts trade for morethan a certain value for more than a specific number of continuoustrading days, a new release of licenses may be warranted. The initialoffering stipulates the conditions under which additional licenses maybe released. As with the initial offering, the release of additionallicenses may be based on a certain quantity of IP license contracts, acertain duration for the IP license contracts, or a combination of bothquantity and duration. For example, the initial offering may stipulatethat a release of ten new licenses is warranted when trading of theexisting licenses exceeds $1,000,000 for more than a thirty-day tradingperiod. The second offering of new licenses may stipulate the conditionsunder which yet another release of new licenses may be warranted.Additional licenses are released in a manner similar to the initialrelease described above. The new licenses are then bought and sold asdescribed above with respect to day-to-day transactions.

In accordance with one embodiment of the present invention, theinvestment bank or its agents may take legal action to require apotential licensee to purchase a license, such as where potentiallicensee may be infringing the IP and refuses to purchase a license. TheIP owner may choose to join any enforcement proceedings if desired or ifnecessary. Excess funds generated from any resolution of legal actionmay be used to purchase licenses from the IP trading exchange, whichmitigates the high cost of litigation and, at the same time, increasesthe price of the contracts and value of the IP.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT

The present invention will now be described more fully with reference tothe Figures in which the preferred embodiment of the present inventionis shown. The subject matter of this disclosure may, however, beembodied in many different forms and should not be construed as beinglimited to the embodiment set forth herein.

Referring now to the drawings, wherein like reference numerals designateidentical or corresponding parts throughout the several views, FIG. 1shows the steps of an initial offering of licenses on an IP tradingexchange according to a presently preferred embodiment of the presentinvention.

Initially, the IP Owner 10 identifies IP that it desires to license. TheIP may include patents, copyrights, trademarks, trade dress, and tradesecrets. Moreover, the IP may include issued patents, registeredcopyrights, registered trademarks, or any other granted or registeredIP. Additionally, the IP may include pending patent applications,pending trademark applications, or any other pending IP application orregistration. The IP Owner 10 then solicits bids from IP InvestmentBanks 12 to perform the listing and underwriting process.

The IP Investment Banks 12 then bid on the listing and underwritingprocess, and the IP Owner 10 selects one of the banks, typically thelowest bidder, to carry the process forward. Investment Banks 12typically work out a fee structure for the listing and underwritingprocess, which may be fixed fees, success or percentage fees based onthe success of the IP initial offering, or a combination of both fixedand success fees.

The selected IP Investment Bank 12 begins the due diligence phase of thelisting process. The due diligence phase may include: packaging the IPfor listing; performing legal analysis of the strength and ownership ofthe IP; performing market analysis of the products and/or parties whichmay infringe the IP and require or benefit from licensees to the IP;performing valuation analyses; and marketing the IP. The due diligencephase may be conducted by the IP Owner 10 or contracted out to lawyers,economists, marketing firms, or other specialists and third parties.

Upon completion of the due diligence phase, the IP Investment Bank 12determines whether or not the IP should be listed on the IP TradingExchange 14 based on the due diligence review. This determination isbased on the IP Investment Bank's own underwriting criteria. As with allrisks, some banks are more conservative than others and may havedifferent standards in evaluating the above factors of the due diligencereview. Should the IP Investment Bank 12 accept the IP for listing onthe IP Trading Exchange 14, the IP Investment Bank 12 assigns a listingprice and provides an estimate of the cash from listing the IP to the IPOwner 10.

If the listing price is satisfactory, the IP Owner 10 may grant the IPInvestment Bank 12 an exclusive license for the intellectual propertywith the right to sub-license on a limited (e.g., quantity)non-exclusive basis. Additionally, the IP Owner 10 may retain anon-exclusive right to practice the IP at no cost or at a reduced cost.Further, the IP Investment Bank 12 may obtain an exclusive license inorder to have the ability to enforce the IP against infringers.

Upon receiving the exclusive license, the IP Investment Bank 12 mayprepare an IP prospectus and/or other marketing materials to attractpotential licensees, investors, and/or speculators. These materialslikely include information obtained from the due diligence review. Forinstance, the materials may include: a listing of the IP included in thenon-exclusive license; legal analysis of the strength of the IP; theterms of the non-exclusive license contract including the number ofunits that can be produced and the duration of the contract; the natureof the enforcement actions that may be taken against infringers;portions of the valuation analysis; when and under what terms additionallicenses may be made available (e.g., if license contracts trade formore than a certain value for more than a specific number of continuoustrading days, a new release of licenses will be made available).

Next, the IP Owner 10 and/or the Investment Bank 12 prepares for theinitial offering of the IP rights. As with stock IPOs, the InvestmentBank 12 seeks to list certain IP license contracts on the IP TradingExchange 14. The listing of IP license contracts may be based onquantity, duration, or a combination of both.

Then, the IP Trading Exchange 14 allows member firms to list the IPlicense contracts on the exchange. The IP Trading Exchange 14 carriesout duties similar to current stock exchanges. For example, the IPTrading Exchange 14 monitors disclosures, guarantees transactions, andclears transactions.

Speculators and Investors 16 and/or Licensees 18 may purchase the IPlicense contracts from the IP Trading Exchange 14. Speculators andInvestors 16 purchase IP license contracts with the goal of seekingappreciation or re-selling at a higher price at some time in the future.In this sense, the IP license contracts are similar to a futurescontract. Licensees 18, on the other hand, purchase the contracts inorder to practice the IP or legitimize infringing uses of the IP. Inthis sense, Licensees 18 take delivery of the actual license. Unused IPlicense contracts may be re-listed at a later time on the IP TradingExchange 14 upon an audit of current operations indicating that the IPis no longer being practiced or is within levels considered acceptableby the license. Further, if future operations require a license and theLicensee 18 has sold the license through re-listing, then the Licensee18 will need to acquire a new license from the IP Trading Exchange 14 inorder to resume operations.

The listing IP Investment Bank 12 may initiate patent infringementactions and other enforcement proceedings against infringers who refuseto purchase licenses through the IP Trading Exchange 14. The IP Owner 10may choose to join any enforcement proceedings if desired or ifnecessary. Excess proceeds from infringement actions may be used by theInvestment Bank 12 to purchase IP license contracts from the IP TradingExchange 14, thereby increasing the price of the contracts and raisingthe value of the IP.

FIG. 2 shows typical day-to-day transactions on an IP trading exchangeaccording to a presently preferred embodiment of the present invention.

As part of the first step of a typical day-to-day transaction of IPrights, the IP Contract Owner 20 of at least one IP license contractlists the contract and an asking or specified price on the IP TradingExchange 14. In situations where multiple contracts are owned, the IPContract Owner 20 may list multiple if not all of the license contractson the exchange. The IP Contract Owner 20 may perform the listing itselfor it may retain an Exchange Member 22 to perform the listing. The IPContract Owner 20 may be an investor or speculator who is re-selling thelicense contract for a higher price. Alternatively, the IP ContractOwner 20 may be a licensee who no longer needs the license, as describedbelow, or is selling excess license contracts.

Through the IP Trading Exchange 14, buyers determine whether or notdemand is sufficient to buy the license contract for the IP ContractOwner's specified price as listed on the exchange. If buyers areunwilling to pay the specified price, then the IP Contract Owner 20retains the license contract until such time when the price becomes moreattractive in the market. Alternatively, the IP Contract Owner 20 maylower the asking price to attract a buyer, which may be necessary tosell the license contract if expiration is imminent.

If a Buyer 24 is willing to pay the specified price, then the sale movesforward towards closing. Typically, an Exchange Member 22 purchases thelicense contract on behalf of the Buyer 24 at the specified price, andthe IP Trading Exchange 14 clears the transaction. In most anysituation, the IP Trading Exchange 14 monitors any disclosures andguarantees and clears the transaction.

When the Buyer 24 is an investor or speculator, the Buyer 24 may holdthe license contract until such time that the price becomes attractivefor the Buyer 24 to sell the contract. If expiration is imminent, theBuyer 24 may be forced to sell the license contract, perhaps even at adiscounted price.

When the Buyer 24 is a licensee, the Buyer 24 may hold the contractbeyond expiry and take delivery of the actual license. For instance, alicensee may require the actual license in order to practice the IP orlegitimize current operations that may be infringing. Typically, theactual license is delivered by the specialist holding the license.

Where delivery of the actual license has occurred, the holder of thelicense may only re-list the license upon an audit of current operationsindicating that the IP is no longer being practiced or is within levelsconsidered acceptable by the license. Further, if future operationsrequire a license and the licensee has sold the license throughre-listing, then the licensee will need to acquire a new license fromthe IP Trading Exchange 14 in order to resume operations.

While contracts are listed on the IP Trading Exchange 14, the IPinvestment bank that initially listed the transaction or its agents mayencourage potential licensees to purchase licenses from the exchange.Conducting a licensing and/or marketing campaign often fosters interestin the licenses, which may generate activity in the market andultimately raise the exchange prices and IP value.

Depending on trading activity, it may be necessary to release additionallicense contracts. For instance, if license contracts trade for morethan a certain value for more than a specific number of continuoustrading days, a new release of licenses may be warranted. The initialoffering stipulates the conditions under which additional licenses maybe released. For example, the initial offering may stipulate that arelease of ten new licenses is warranted when trading of the existinglicenses exceeds $1,000,000 for more than a thirty-day trading period.The second offering of new licenses may stipulate the conditions underwhich yet another release of new licenses may be warranted. Additionallicenses are released in a manner similar to the initial releasedescribed above. The new licenses are then bought and sold as describedabove with respect to day-to-day transactions.

Additionally, the investment bank or its agents may take legal action torequire a potential licensee to purchase a license, such as wherepotential licensee may be infringing the IP and refuses to purchase alicense. The IP owner may join any enforcement proceedings if desired orif necessary. Excess funds generated from any resolution of legal actionmay be used to purchase licenses from the IP trading exchange, whichmitigates the high cost of litigation and, at the same time, increasesthe price of the contracts and value of the IP.

Many changes and modifications will occur to those skilled in the artupon studying this description. All such changes and modifications whichare within the spirit of the invention are intended to be includedwithin the scope of the claims.

1. A computerized intellectual property exchange system for facilitatingthe trading of unitized contracts relating to intellectual propertyrights, said system comprising: a computerized storage device configuredto store at least one unitized intellectual property license contract,said at least one unitized license contract relating to intellectualproperty rights, said intellectual property including patents,copyrights, trademarks, trade dress, and/or trade secrets, said at leastone unitized license contract comprising the right to practice saidintellectual property for up to a predetermined quantity of instancesand the obligation to report when said predetermined quantity ofinstances has been reached; a computer-accessible forum, saidcomputer-accessible forum defining at least one regulation of tradingand at least one requirement of listing on said computerized exchange,said computer-accessible forum configured to allow a plurality ofparticipants to trade said at least one unitized license contract, saidplurality of participants comprising: at least one seller, said at leastone seller having said at least one unitized license contract comprisingsaid right to practice said intellectual property for up to saidpredetermined quantity of instances, said at least one seller desiringto trade said at least one unitized license contract; and at least onebuyer, said at least one buyer desiring to obtain said at least oneunitized license contract, said buyer having said obligation to reportwhen said predetermined quantity of instances has been reached.
 2. Thesystem of claim 1 wherein the intellectual property rights are selectedfrom the group consisting of: issued patents, registered copyrights,registered trademarks, and any other granted or registered intellectualproperty.
 3. The system of claim 1 wherein the intellectual propertyrights are selected from the group consisting of: pending patentapplications, pending trademark applications, and any other pendingintellectual property application or registration.
 4. The system ofclaim 1 wherein said plurality of participants further comprises atleast one investment bank, said at least one investment bank enabled tounderwrite said desired trade of said at least one unitized licensecontract.
 5. The system of claim 4 wherein said at least one investmentbank is enabled to check said at least one unitized license contract tocertify compliance with said at least one requirement of listing on saidexchange.
 6. The system of claim 4 wherein said at least one investmentbank is enabled to rate said intellectual property rights, said ratingindicative of the strength of said intellectual property rights based ona legal analysis of said rights.
 7. The system of claim 4 wherein saidat least one investment bank is enabled to insure said intellectualproperty rights during said trading transaction.
 8. The system of claim4 wherein said at least one investment bank is enabled to value saidintellectual property rights, said valuation based on a marketabilityanalysis of said rights.
 9. The system of claim 4 wherein said at leastone investment bank is enabled to enforce said intellectual propertyrights against an infringer and/or a party refusing to purchase said atleast one unitized license contract.
 10. The system of claim 4 whereinsaid at least one investment bank is enabled to purchase at least oneunitized license contract with proceeds from any enforcementproceedings.
 11. The system of claim 1 wherein said at least one buyercomprises an investor, said investor configured to purchase at least oneunitized license contract to achieve appreciation.
 12. The system ofclaim 11 wherein said investor acts on behalf of said at least oneseller, said at least one buyer, or an investment bank.
 13. The systemof claim 11 wherein said investor comprises a market maker, aspeculator, or an arbitrageur.
 14. The system of claim 11 wherein saidat least one investor is a licensee.
 15. The system of claim 1 whereinsaid at least one buyer comprises a licensee, said licensee configuredto purchase at least one unitized license contract to practice saidintellectual property rights.
 16. The system of claim 1 wherein said atleast one seller comprises an owner of said intellectual propertyrights, an investment bank, or an investor.
 17. A computer-implementedmethod for trading unitized contracts relating to intellectual propertyrights by at least one seller of said rights to at least one buyerthrough a computer-accessible intellectual property exchange, saidmethod comprising the steps of: storing in a computerized storage deviceinformation describing said at least one seller offering to at least oneinvestment bank an exclusive license of said intellectual propertyrights with the right to practice said intellectual property for up to apredetermined quantity of instances and the obligation to report whensaid predetermined quantity of instances has been reached, saidintellectual property including patents, copyrights, trademarks, tradedress, and/or trade secrets; storing in a computerized storage deviceinformation describing said intellectual property exchange defining atleast one regulation of trading and at least one requirement of listingon said intellectual property exchange, said intellectual propertyexchange allowing a plurality of participants to trade said at least oneunitized license contract; storing in a computerized storage deviceinformation describing said at least one investment bank accepting saidexclusive license of said intellectual property rights; storing in acomputerized storage device information describing the terms of said atleast one investment bank listing said at least one unitized licensecontract of said intellectual property rights on said intellectualproperty exchange; storing on a computerized storage device informationdescribing said at least one buyer purchasing through said intellectualproperty exchange said at least one unitized license contract comprisingsaid right to practice said intellectual property for up to saidpredetermined quantity of instances; and processing in a microprocessorthe clearing of said purchase of said at least one unitized licensecontract by said buyer having said obligation to report when saidpredetermined quantity of instances has been reached.
 18. The method ofclaim 17 wherein said at least one investment bank enforces saidintellectual property rights against an infringer and/or a partyrefusing to purchase said at least one unitized license contract. 19.The method of claim 17 wherein said at least one buyer comprises aninvestor, said investor purchasing said at least one unitized licensecontract to achieve appreciation.
 20. The method of claim 17 whereinsaid at least one buyer comprises a licensee, said licensee purchasingsaid at least one unitized license contract to practice saidintellectual property rights.
 21. The method of claim 17 wherein said atleast one seller comprises an owner of said intellectual propertyrights, said at least one investment bank, or an investor.
 22. Thesystem of claim 1 wherein said at least one unitized license contractrelates to a group of intellectual property rights.
 23. The system ofclaim 22 wherein said group of intellectual property rights relates to acommon product and includes patents, trademarks, and/or copyrights. 24.The system of claim 22 wherein said group of intellectual propertyrights relates to a common family of rights.
 25. The method of claim 17wherein said at least one unitized license contract relates to a groupof intellectual property rights.
 26. The method of claim 25 wherein saidgroup of intellectual property rights relates to a common product andincludes patents, trademarks, and/or copyrights.
 27. The method of claim25 wherein said group of intellectual property rights relates to acommon family of rights.
 28. The method of claim 17 wherein the step ofclearing of said purchase further comprises said microprocessormodifying said information describing said at least one seller and saidat least one buyer to show that rights to said at least one unitizedlicense contract has passed from said at least one seller to said atleast one buyer.
 29. The method of claim 28 wherein the step of clearingof said purchase further comprises said microprocessor modifying saidinformation describing said at least one seller and said at least onebuyer to show that compensation has passed from said at least one buyerto said at least one seller.
 30. The system of claim 1 wherein saidlicenses to practice said intellectual property provide terms concerningenforcement of said intellectual property rights.
 31. The system ofclaim 1 wherein said licenses to practice said intellectual propertyprovide terms concerning the resale of said intellectual propertyrights.
 32. The system of claim 1 wherein said licenses to practice saidintellectual property provide terms regarding reporting of use of saidintellectual property rights.
 33. The system of claim 1 wherein saidlicenses to practice said intellectual property provide for a specificduration of use.
 34. The method of claim 17 wherein said licenses topractice said intellectual property provide terms concerning enforcementof said intellectual property rights.
 35. The method of claim 17 whereinsaid licenses to practice said intellectual property provide termsconcerning the resale of said intellectual property rights.
 36. Themethod of claim 17 wherein said licenses to practice said intellectualproperty provide terms regarding reporting of use of said intellectualproperty rights.
 37. The method of claim 17 wherein said licenses topractice said intellectual property provide for a specific duration ofuse.
 38. The system of claim 1 wherein said at least one regulation oftrading is one concerning enforcement of the intellectual propertyrights.
 39. The system of claim 1 wherein said at least one regulationof trading is one concerning the resale of licenses to practice saidintellectual property rights.
 40. The system of claim 1 wherein said atleast one regulation of trading is one concerning reporting use of saidlicense to practice said intellectual property rights.
 41. The system ofclaim 1 wherein said at least one requirement of listing is oneconcerning enforcement of said intellectual property rights.
 42. Thesystem of claim 1 wherein said at least one requirement of listing isone concerning the price of licenses to practice said intellectualproperty rights.
 43. The system of claim 1 wherein said at least onerequirement of listing is one concerning the field of use of saidlicense to practice said intellectual property rights.